I am so excited to announce that I am now working as a QuickBooks and Accounting trainer at the Holistic School of Business! I accepted this position because it presents a truly outstanding opportunity for my clients to work with me at NO-COST!

• QuickBooks Setup: Utilizing the instructor’s in-depth background in accounting and QuickBooks company setup, you’ll learn how to set up your accounting system using QuickBooks, then you’ll learn how to use the software to keep your bookkeeping up-to-date! You’ll experience great relief and satisfaction in knowing that your Accounting System is finally set up for your business.
• Individual, One-On-One Sessions: Your one-on-one mentorship sessions will be customized to meet the unique needs of you and your business.
• Greater Ease: You’ll no longer feel stressed out come tax season because you’ll be prepared well in advance.
• Financial Clarity: You’ll enjoy a much better understanding of your financial situation, and you have the knowledge you need to make more educated decisions regarding your money and spending.
• Training in Small Business Accounting: You’ll learn all the fundamentals of accounting and budgeting. You’ll also develop skills to complete all basic level accounting tasks not only for your business, but for any business using QuickBooks software.
• Budgeting: You’ll learn how to develop a budget for your business so that your spending and other financial decisions are always optimized for maximum effectiveness.

For Immediate Release

Vermont Tax Practitioner Completes Rigorous National Tax Practice Institute™

Diana Sheltra, EA Earned Elite Designation

Washington, DC – November 14, 2016, Diana Sheltra, EA, has earned the prestigious Fellow designation from the National Association of Enrolled Agents (NAEA) for completing the three levels of the National Tax Practice Institute (NTPI®). This achievement demonstrates Diana Sheltra, EA’s dedication to protecting taxpayer rights and attests to her expertise in tax.

NTPI Fellows® have completed a demanding three-part curriculum that has uniquely prepared them to effectively represent their clients before all administrative levels of the IRS. Having successfully completed coursework covering all variances of examinations, audits, collections and appeals, and having studied best practices and role-playing, Fellows know the entire process from both the client and IRS perspective. Earning the EA license denotes competence and the right to represent taxpayers. Fellows have made the commitment to a higher level of knowledge and excellence. The course, open only to enrolled agents, CPAs and tax attorneys, was developed to prepare licensed representatives to protect their clients’ rights by disseminating the most recent information about IRS laws and procedures critical to representation.

Enrolled agents (EAs) are a diverse group of independent, federally-authorized tax practitioners who have demonstrated a high level of technical competence in tax and are licensed to practice by the Internal Revenue Service. The only federally-authorized tax practitioners with unlimited rights of representation before the IRS, EAs advise and represent taxpayers who are being examined by IRS, are unable to pay taxes or are trying to avoid or recover penalties. EAs also prepare tax returns for individuals, partnerships, corporations, estates, trusts and any other entities with tax-reporting requirements. Unlike tax attorneys and CPAs, who may or may not choose to specialize in taxation, all EAs specialize in taxation and are required by the federal government to maintain their professional skills with continuing professional education. Enrolled agents are “America’s Tax Experts!”

Diana Sheltra, EA is a member of the National Association of Enrolled Agents (NAEA) and the Northern New England Society of Enrolled Agents.

###

About NAEA

The National Association of Enrolled Agents (NAEA) is a professional society whose members are dedicated to honest, intelligent and ethical representation of the financial position of taxpayers before the IRS. Its efforts are supported nationwide through a network of affiliated state and local chapters. Members of NAEA must fulfill continuing professional education requirements that exceed the IRS’ requirements. NAEA membership also entails stringent adherence to a Code of Ethics and Rules of Professional Conduct, as well as compliance with the Treasury Department’s Circular 230 regulations. NAEA members are experienced, well-trained tax professionals who effectively represent their clients and work to ensure the tax code is fairly applied and reasonably enforced.

If your request for the First-Time Penalty abatement fails the next course of action is Reasonable Cause Penalty Abatement.

The taxpayer or Enrolled Agent would submit a written request for penalty relief based on a reasonable cause.

Accepted Reasons for Penalty Abatement:

1. Natural or man-made disasters.
2. A taxpayer’s death, serious illness, incapacitation.
3. Tax preparer errors.
4. Bookkeeper/accountant fraud or embezzlement of funds.
5. Erroneous oral or written instructions or advice furnished by the IRS.
6. Financial hardship.

Even if any of these situations have occurred you could still be turned down by the IRS. In that case you would have the option of filing an appeal.

When a taxpayer owes a substantial amount of money, it is a very stressful situation. This could affect your family, marriage and friendships. Dealing with the IRS in these situations can be stressful and intimidating.  

This is where Enrolled Agents come in handy. We are enrolled to practice before the IRS. We take the stress away and handle the situation for you. We understand all the available options in these situations.

You may see the famous commercials that state “pennies on the dollar.” Sounds great, doesn’t it? This is not reality. The only time that can possibly happen is if the taxpayer is insolvent.  

These firms have you pay them at least $5K, insist you pay them first and not pay the IRS. They tell you they can settle your case for little or no payment. It very rarely happens that way!

It is not uncommon for a taxpayer to fall behind in their taxes. They may have started a new business did not pay estimated taxes during the year, or self-employment income has increased substantially from the prior year. Or, one spouse was unaware that the other spouse had not been paying the taxes.

Whatever the reason for delinquent taxes, there is always a remedy to alleviate the situation. Some or all of the penalties may be abated and in most cases the taxpayer will be on a reasonable payment plan.

The first line of defense is having your Enrolled Agent request first-time penalty abatement from the IRS. This is an administrative waiver of failure to file/failure to pay penalties assessed against individual income taxes, business taxes and payroll taxes.

The first-time penalty abatement can only be received once for each type of qualifying tax, and only for one tax period. The taxpayer must have a clean record for three years to be considered for this type of penalty relief. In addition, all of your tax filings must be current.

Your request must be made within two years of the date that the balance was paid on the requested tax period or within three years (including extensions) of the date that the tax return was due.

The types of penalties that are not eligible for the first-time penalty abatement are: failure to pay estimated taxes, accuracy-related penalties, fraud penalties, civil penalties, or bad check penalties.

In a later article, I will discuss Reasonable Cause Penalty Abatement.

Stay tuned.

You foster strong relationships with your customers through exceptional service and value. But a thank-you gift never hurts. In addition to the goodwill you earn as a gift-giver, you also earn a small tax deduction from the IRS.

A very small tax deduction, which is limited to a maximum of $25 for each client. The amount may seem miserly but it was generous when it was set more than 50 years ago. Here are a few things you should know about the tax benefits of your gifts:

• One customer, one deduction. The IRS allows only one deduction to a customer. So if you give gifts to a customer, the customer’s spouse and each of their children, it’s still capped at $25. Also, you and your spouse are treated as one taxpayer for that client, even if you have independent business relationships with the client and work for different companies.
• The IRS doesn’t consider incidental costs to be part of the gift, and so those costs are not capped. The service says incidental costs include packaging, gift-wrapping, shipping and personalized engraving on pens or jewelry.
  
• Small-value giveaway items are not considered gifts for the purpose of the $25 limit. Anything that costs less than $4 per unit, has the name of your business on it, and is widely distributed is considered a promotional item. Those can be written off as a business expense.
  
• Always document your gifts completely. Your records should include the description of the gift and the receipt to verify its cost, the purchase date, the business purpose and the relationship between the gift giver and the client.

Some items fall into a hazy area between gift and entertainment, such as concert, theater or sporting event tickets. If you give these items to a client, they are subject to the $25 limit. However, if you attend the event with the client, the tickets become an entertainment expense, and 50 percent of the face value is deductible.

For example, if you give a client two $15 theater tickets, it could be a $25 gift expense or a $15 entertainment expense. If the two tickets cost $200, you get the $25 deduction if you don’t attend, and a $100 deduction if you do.

Check out the full IRS chapter on the gift deduction.

Did you know that a windfall refers to a piece of fruit that is blown from a tree? You get all the benefits of a nice snack with none of the climbing or stretching and picking.

Most of us know about windfalls in connection with money—that unexpected good fortune that puts a large sum of money into your hands. Turns out, it’s unexpected good fortune for the IRS too, which will want its portion.

In fact, it’s likely that today’s income reporting setup means the government will probably know about your (legal) largesse before you do. When you’re making your celebratory telephone calls, make sure to include one to your tax consultant, who will have strategies to help you to hold on to more of the fruit.

Let’s look at that ultimate stroke of good luck, the lottery. You’re never going to win it, but let’s say you do. Along with a check, the lottery winner gets a form W-G2  reporting  the winnings. Just for fun, you can take a look at it here: https://www.irs.gov/pub/irs-pdf/fw2g.pdf

You’re going to owe a substantial amount in state taxes, unless you live in one of the seven states without a personal income tax (Florida, Iowa, South Dakota, Tennessee, Texas, Wyoming and Washington), or in one of the three states that don’t tax lottery winnings (California, Delaware and Pennsylvania). You can check your state’s rate here: http://taxfoundation.org/blog/what-percentage-lottery-winnings-would-be-withheld-your-state

Writing that tax check can be painful, but if you do it before the end of the year it will help you when federal tax season rolls around. State tax is deductible, and if you make that payment before Jan. 1, 2017, it will work for you in the 2016 tax year. Presumably you’re not going to win the lottery in consecutive years, so a tax deduction for the 2017 tax year won’t do you nearly as much good.

Now for the federal bite. There will be a 25 percent withholding from your lottery prize. That may seem like a lot, but it gets worse. You’ll wind up paying the top tax rate of 39.6 percent on what the government considers “ordinary income.” That means you’ll have to set aside an additional 14.6 percent to cover that bill.

The rule is, always: you’ll pay for good advice but you’ll pay more without it.

Right now, the idea of thinking about tax filing season may sound as welcome as the hiss of air leaking from your swimming pool raft. But planning ahead may keep you from getting soaked later.

So if you’re considering anything more complex than a standard deduction, this is a good time to take a look at things you can do before the end of the year to save money and avoid April stress.

First, you need to get organized. If you’re thinking about taxes now, you probably aren’t the type of person who shows up at the preparer’s office with a sack full of receipts. Still, if your record-keeping has fallen behind or gotten a little sloppy, it’s good to tidy up before the crush of the late-year holidays.

Then spend a few minutes at https://www.irs.gov/credits-deductions just to make sure you’re considering all the credits and deductions to which you’re entitled. The site’s News & Events page can also be a treasure trove. Scan the headlines to see if there’s anything that might benefit you.

One of the primary aids for planners this year is that in December, 2015, Congress extended a number of a tax breaks instead of waiting until spring and extending them retroactively. Among them are tuition deductions, sales tax deductions, energy efficient homes credit for individuals and depreciation advantages for businesses.

Next, think about any major changes you’ve been through in the past year. Start a business? Lose a job? Buy a home? Get married or divorced? Have a child? All have tax implications and an impact on the way you file your return.

Another area to examine is your charitable donations. Whether you’re generous, or less so, having a plan for your giving helps with your taxes. Making those donations before the end of the calendar year will help offset your tax bill. Those donations don’t have to be cash. Donating property that you’ve owned for at least a year or appreciated stocks. Remember to save all receipts. Carefully filing them now can save some discomfort later.

You can also donate to yourself — in other words, ramp up your contributions to your retirement accounts. If you’re not giving the maximum to your 401(k), you’re losing tax benefits.

Check any flexible spending accounts you have for health or child care. Your contributions into the account aren’t taxed, but the money evaporates at the end of the year. Make sure you have a plan to spend it all.

Depending on your level of control, making payments before the end of the year and deferring income until after Jan. 1 is another way to keep your tax bill low.

As you’re working through your possibilities, keep an eye on your Alternative Minimum Tax triggers. The AMT, designed to keep the wealthy from using legitimate tax incentives to reduce their bill to almost nothing, does away with many of the common deductions like the personal exemption and state income tax paid. If you’re close, do your research or seek advice from your tax expert.

Finally, schedule an end-of-year review appointment with your preparer. That will allow some time for any decisions you need to make before the calendar flips over and it’s time to say “wait ‘til next year.”

The Internal Revenue Service and tax software people lead you to believe that your filing is getting easier and easier. Meanwhile, the tax laws remain dense and complex.

The distinction is that the simple and fast way isn’t always the best way. So why should you pay to have someone file your tax return? The top reason  is that you can save money. If a tax professional finds just one item that you or your prepackaged software missed, it can more than recoup your outlay.

More difficult than deciding to choose a tax professional is deciding which one to choose. There are a bewildering number of options from chain preparers to single-person shops to tax preparation specialists.

The big preparers have the same advantages that other retail chains have. Their employees receive some training, they are used to solving simple tax questions.

• Consider if your return is not complex and you are solving relatively simple problems, and they will take care of you quickly.

Enrolled agents (EAs) are licensed by the federal government, have passed a comprehensive IRS examination, can represent you in disputes, and are required to participate in continuing education. To find an agent near you, check the directory at http://taxexperts.naea.org/.

• Consider if you have real or imagined fears of facing an audit. Also consider if you run a small business or you need help to reduce your tax liability.
• Consider if you need long-term tax planning, you have opened or closed a business, your life situation has changed dramatically, or you have had high tax bills and are looking for relief this time around.

Tax lawyers are not necessarily return preparers but they can help with advice in complex legal circumstances.

• Consider if you are facing criminal charges.

Regardless of the type of preparer you choose, it’s important to ask some questions before you drop off your documents and walk out of the office.

The IRS has a handy list of things that you should know about your preparer here: https://www.irs.gov/uac/tips-for-choosing-a-tax-return-preparer

In addition, you probably want to know if the professional is familiar with situations like yours, is safe or aggressive when it comes to deductions, what documents they will need, and how accessible they are once your return has been filed. Finally, watch out for these red flags with your preparer. If you see even one of them, walk away. Quickly.

• You are asked to sign a blank return.
• You are told your taxes can be prepared just using your last pay stub.
• Your return will not be sent directly to you or directly deposited in your bank.
• Your fee is based on the amount of the refund.

Health Savings Accounts are one of my favorite investment vehicles. There are many advantages, as you will see. With most Americans having high-deductible health plans, and not able to take medical deductions on Schedule A (itemized deductions), HSAs are the way to go!

A health savings account (HSA) is an account created exclusively for the purpose of paying the qualified medical expenses of an account beneficiary. In other words, an HSA is a tax-advantaged savings account that is owned by an employee or self-employed person.

An HSA is available to taxpayers who have a high-deductible medical insurance plan. A high-deductible plan is one with an annual deductible of not less than $1,300 for self-only coverage (2015 and 2016) and $2,600 (2015 and 2016) for family coverage. Annual out of pocket expenses cannot exceed $6,550 in 2016 for self-only plans and $13,100 for 2016 for family plans.

Contributions to an HSA may be made by an individual, by an individual’s employer, or both. If contributions are made by an individual, they are deductible on the tax return. Contributions made by an employer are excluded from the employee’s income.

The maximum amounts for 2016 are $6,750 for a family and $3,350 for an individual. At age 55 you can make catch up contributions in the amount of $1,000 per year.

Individual Who Cannot Contribute:

• Enrolled in Medicare Part A or B
• Received medical benefits through the Dept. of Veterans Affairs within the previous three months.

Penalties for Excess Contributions are subject to a 6% tax on the value of the account.

An HSA allows account owners to pay for current health care expenses and save for those in the future. Its first advantage is that contributions are tax-deductible, or if made through a payroll deduction, they are pretax. Second, the interest earned is tax-free. Third, account owners may make tax-free withdrawals for qualified medical expenses.

As employers try to shift health care costs away from the company and onto workers, high-deductible plans are becoming more common. That means more Americans are becoming eligible for HSAs.

You’re a smart person when it comes to your money. You stay within your budget, you plan for the future, you have an emergency fund for that day when your hot water heater leaves you cold.

So why would you pay someone file your tax return? The top reason according to CPA Practice Advisor is that you can save money. If your tax preparer finds anything that you or your prepackaged software missed, it can more than recoup your outlay.

That may tip the scales right there. But there are other reasons.

For one thing, it saves you time. Unless your return is extremely simple or unless you are one of those people who enjoy going through the 70,000 pages of the U.S. tax code, there is a comfort in turning your numbers over to someone who’s used to dealing with them. Like changing your own oil or repairing your own plumbing, sometimes it’s more convenient and more effective to let a professional do the work.

You may like the simplicity that tax software brings. Those preparation programs are very good and less expensive than using a service. But they don’t necessarily ask all the questions that could lead to money-saving deductions for you. Plus, there are limits to software understanding. Put your hand up if you’ve never been embarrassed by a spellcheck error, for example.

Whether you do it yourself or use the software, mistakes are expensive. The IRS can impose late payment penalties for a mistake, negligence or fraud penalties, add interest on money you owe. 

Even if you handle your own taxes most years, there are times when it makes sense to get some help, such as when you’ve experienced dramatic changes in your home or work life. Consider a professional if:

• you’ve married, divorced, lost a spouse or adopted a child.
• begun caring for aging parents, inherited money, bought a house, or lived or worked in at least two states.
• you’ve started your own business or you’ve joined the global economy and have business assets, investments or income from outside the U.S.
• you’ve won the lottery, or any other substantial prize.

If you plan to itemize your deductions, a pro can definitely help. The tax laws change constantly and deductions can appear and disappear. Enrolled agents, who are licensed by the IRS, are required to pass a test and to participate in continuing education. They can help you make the most of those items.

Then there’s the planning aspect. A tax preparer can help you plan for your long-term future. And she can walk you through the process to help you save on the following year’s taxes.

You should definitely hire a professional if you make a lot of money. You will want to maximize your deductions and minimize the risk of an audit note from the IRS.

Finally, always check out the tax preparer before you entrust your return to her. Experience always beats price.